FORD has rebuffed an approach from Renault, its French rival, to buy Jaguar, the ailing British luxury-car company.

Senior motor-industry sources said yesterday that Ford bosses were sounded out by their French counterparts last year, when the scale of the mounting losses at Jaguar became apparent.

In 2004 — the most recent year for which accounts are available — Jaguar lost £429.3m, down from the previous year’s £601.1m deficit.

Last year Jaguar ceased car production at its famous Browns Lane plant in the Midlands, with 1,000 of its workers accepting voluntary redundancy.

But Ford chiefs — led by chairman and chief executive Bill Ford Jr — are understood to have rejected Renault’s overtures.

Ford’s determination to make Jaguar work was demonstrated last month when it injected an extra £1.2 billion into the company through the purchase of new shares. It was the second such refinancing in two years.

Rumours of Renault’s interest surfaced in the French press last month, but were dismissed as speculation by Ford executives, most recently at the Detroit Motor Show 10 days ago.

A spokesman for Jaguar reiterated the denial yesterday, while a Renault spokesman branded it as “an unfounded rumour”.

But motor-industry executives and senior Whitehall sources have been made aware of Renault’s interest.

Jaguar is a big employer, and has received grants from the Department of Trade and Industry to encourage investment in new facilities and projects.

Renault, which now has as its chief executive “Le cost-killer” Carlos Ghosn, is understood to covet Jaguar as a potential weapon in the upmarket car sector, a niche it has never managed to conquer.

“Renault looks with envy at the kind of margins its German rivals BMW and Mercedes- Benz can make in that market, and it would love to have a brand to compete,” said one leading government adviser this weekend.

Jaguar has become something of a black hole for Ford.

It bought the British company in 1989 for £1.6 billion and has since had to pump in about another £2.1 billion to keep it afloat.

Plans to increase volumes to compete with marques such as BMW have been quietly dropped, and Jaguar is in future likely to concentrate on smaller numbers of high-margin cars.

A decision is eagerly awaited on whether its highest-volume product, the X-type, will be replaced by a new model.

Meanwhile, Bill Ford Jr will announce a make-or-break restructuring plan that is expected to result in the loss of about 25,000 jobs and the closure of several plants across North America.

The “Way Forward” scheme — which has been drawn up by Mark Fields, the Ford boss who oversaw the closure of Browns Lane before moving to Detroit — is the second such revamp since Bill Ford Jr took over the top job at the automotive giant.

Ford and General Motors, its deadly Detroit rival, have struggled to cope with mounting losses as Japanese and other foreign rivals have eaten into their market share.

Both are hampered by high employee pension and healthcare costs.